The Myth of the Older Historical School of Economics

Abstract

Itis a commonplace of German historiography and the history of economic thought in particular that German economists pursued aSonderweqin the second half of the nineteenth century, rejecting the theoretical bases of laissez-faire doctrines that were common in Britain and France in favor of a study of economic history. This is generally viewed as taking place in two stages: first, an “older German historical school” that began to question the accepted dogmas of Smithian economics beginning in the 1840s, with the work of Wilhelm Roscher, Bruno Hildebrand, and Karl Knies. This allegedly preceded the “younger historical school” of the 1870s and after, dominated by Gustav Schomoller, Lujo Brentano, and Georg Friedrich Knapp. In calling the existence of this older school a myth, I want to draw on the currently fashionable connotation of the word “myth”: to say, in other words, that this received notion contains some important elements of truth—but masked in such a way as to distort its significance.